How to Get a Credit Card After a Chapter 7 Bankruptcy

Woman talking on the phone looking at a credit card
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When you filed for bankruptcy, you probably swore you'd never get in a credit bind again, regardless of whether it resulted from job loss, divorce, medical issues, or just overspending. In our culture, you can finance everything from a set of towels to the new home you are buying, but you probably recognize the value of credit and can't wait to start rebuilding yours.

While it’s true bankruptcy can stay on your credit record for up to 10 years, what many people don’t realize is what happens to the debt afterward. Learn how quickly you'll be able to get back into the credit market after you receive your discharge.

Some banks and card issuers are so ready to lend to people emerging from bankruptcy that they actively market to them while they’re still in a bankruptcy case. It's not unusual for people to receive credit offers from credit card companies, local car dealerships, and furniture stores. But, don't fall for every offer coming your way. Some are worth investigating, but others are downright silly, and their terms are painfully bad.

Why Credit Card Companies Are Eager to Lend to Chapter 7 Bankruptcy Debtors

It seems counterintuitive that a bank or lender would be willing, much less eager, to give credit to someone who just caused their competitors to lose hundreds or thousands of dollars. But, these are the sound and rational reasons for it:

  • You as a debtor just discharged thousands of dollars in debt, which frees up resources (i.e. income) that can be used to pay back a new credit.
  • The debtor cannot file another bankruptcy for some time. For instance, if you received a discharge in a Chapter 7 case, you can’t receive another Chapter 7 discharge for eight years.
  • The creditor can charge a higher interest rate.

Types of Credit Cards You Can Qualify for After Filing Chapter 7 Bankruptcy

Most of the credit card you’ll consider will be one of two types, secured or unsecured.

Secured Credit Card

There are things you should know about a secured credit card before you open one up. The lender or issuer will require you to deposit a sum of money into a special savings account with the institution. That deposit amount is usually equal to the lending limit the institution will allow on the account. It acts as security for the lender. If you default in the future, the lender won’t be out any money because it only has to draw the money from the deposit account to pay down or pay off the credit balance.

Unless it's used to pay your balance, the money in the savings account still belongs to you. After a length of on-time payments, many companies will allow you to convert a secured card to an unsecured card with a higher credit limit.

A secured credit card often has a lower interest rate than any unsecured accounts you can qualify for right after bankruptcy.

  • Annual Fee: $25
  • APR: 20.24 percent
  • Limit/Deposit: $300 will get you a credit limit of $300
  • Perks: Roadside assistance and cell phone damage protection
  • Annual Fee: None
  • APR: 24.99 percent
  • Late Payment Fee: Up to $39
  • Limit/Deposit: $49 to $200 depending on creditworthiness
  • Perks: Security deposit can be less than credit limit, and you can pay it in installments; roadside assistance; car rental insurance

First Progress Platinum Prestige MasterCard Secured Credit Card

  • Annual Fee: $44
  • APR: 11.99 percent
  • Limit/Deposit: 200 to $2,000
  • Perks: Lower annual interest rate than most

Unsecured Credit Card

You should also know what an unsecured card is and how to get one. This type of card is the industry standard. It’s unsecured, meaning you put up no security or collateral (i.e. the deposit). If you default on your payments, the credit card company has nothing to apply against your balance. Therefore, they'll come after you personally if you do default.

  • Annual Fee: $0 to $75
  • APR: 16.99 percent to 24.99 percent
  • Limit: Initial limit will be $300 to $500 depending on creditworthiness
  • Perks: 1 percent cash back on gas purchases
  • Annual Fee: $35 to $99
  • APR: 23.90 percent
  • Limit: $300
  • Perks: Choose your custom card design

Ways Credit Card Companies Cause Issues With Those Who Just Filed Chapter 7 Bankruptcy

Beware of two major issues:

Interest Rates

Right out of the gate, you could easily find yourself on an account with an interest rate of 20 percent or higher.


Card issuers will often charge annual fees for you to participate in their program and many who provide credit after bankruptcy charge even more. Look out for these specific fees, and be proactive in asking about them:

  • Set-up fee
  • Transaction fee
  • Administrative fee
  • Application fee

It’s not unusual for a new account holder to be awarded an account with a credit limit of $300, only to be slapped with $150 in fees the moment their application is accepted. For the account to be useful at all, you have to pay off those fees as soon as possible, but if she doesn’t, she’ll be paying even more in interest charges. Either way, the lender wins.